Boards Help Companies ‘See Around Corners’
A Q&A with Julia Klein, CEO of a major privately held firm and veteran private company board member.
Private companies worried about being prepared for the next big business disruption could benefit from an independent board that can keep owners and management on track.
That advice comes from someone who’s been there.
Julia Klein is chairwoman & chief executive officer of Reading, Pa.-based C. H. Briggs Company, one of the nation’s largest independently owned distributors of specialty building materials. And she’s a veteran private-company board director who knows first hand the value of good governance, especially when it’s done right.
Here is a Q&A with Klein, who will be a featured speaker at the upcoming Private Company Governance Summit 2018: Boards & Business Disruption. The summit will take place in May in Washington, D.C.
Private Company Director: How much of an issue is business disruption, everything from blockchain to the “Amazon effect”, for private companies?
Julia Klein: All the disruptive forces that affect a Fortune 500 company affect closely held companies, too — maybe not at scale, and maybe some niches are a bit more protected than others — but we still all swim in the same water. One of the best reasons to use an outside board (fiduciary or advisory) is to help private company shareholders and management "see around the corner” and get some outside perspective. Often an advisor’s experience in a different industry can help a privately held company ‘connect the dots’ faster, or an advisor might be able to push a management team to respond more rapidly to disruption because they are not mired in "the way we’ve always done it.”
PCD: Are there certain disruptive forces that have everyone worried, or excited about right now?
JK: Digital disruption, artificial intelligence and talent are the Big 3 topics — every company in every industry is facing challenges in these areas.
PCD: Can you offer examples of how the boards you’ve served on or have been able to observe made a difference for private companies?
JK: By helping a generational transition, the board was able to help the next generation fully step into their leadership roles by providing coaching and formalizing a strategic planning process. The board gave the retiring generation permission to step away gracefully because they knew there were ‘adults at the table’ and helped the next generation take the reins by actively supporting a new paradigm of customer experience and new product development that was stalled with older owners. The board played a role both as a buffer and a catalyst.
Also, I have seen an outside board push to sell a company that was dwindling toward bankruptcy. The board hired professional advisors, got the business marketed, and ran a process that resulted in a much better ending (although not a home run) than management could have anticipated. The outside view was critical to pushing the timeline, hiring professionals, and insisting on a proactive ending. That would not have happened with just shareholders and management at the table.
PCD: How does a company balance board input and management input when it comes to making strategic decisions related to business disruptions?
JK: Understanding governance is critical. The board’s role is not to run the company, but to ensure that the right leader is in place, the right strategy has been crafted, and that execution is happening. The best board/management relationships happen with good ground rules and civil discussion, with both understanding the right roles. This is not always easy, especially when you have board members who have been (and maybe still are) operators in another business. They have to know what hat they are wearing. The best board members are always asking good questions and pushing management to consider new perspectives, not telling them what to do and how to do it.
PCD: What advice would you give a company owner or management about how to find the right board to bolster growth in tumultuous times?
JK: I think privately held companies should look for board members with private company experience; big corporate experience does not always translate well. Chemistry is key with the other members, and with shareholders and company leaders. In addition to a skill matrix, it’s useful to develop a style and approach profile, too. Do you need a calming influence? A good mediator? Excellent questioner? More discipline or more expansive thinking?
Doing this work to figure out what’s really needed around the board table will result in a great pipeline of candidates that will help guide companies through disruptive times.